OPINION: Big banks must be kicked off their thrones

OPINION: Big banks must be kicked off their thrones

A NATIONAL survey released this month shows the majority of Australians (65per cent) believe that there is not enough competition in the Australian banking system.

The online survey of 10,000 people in December by an independent company, D&M Research, also found that 79per cent of people believe the big banks make excessive proﬁt and 54per cent feel that banks do not treat their customers fairly on home loan rates.

The customer-owned (mutual) banking sector and other experts such as Professor Ian Harper (a member of the Wallis Inquiry, the last major inquiry held into the banking system) have been saying for some time that due to the fall-out from the global financial crisis and current industry regulations, the big four banks have an unfair advantage in the Australian mortgage market.

This new survey should show government that consumers (voters) also share these concerns.

The survey shows 71per cent of people agree that the banks have an unfair advantage. Two-thirds of Australians believe it is unfair that credit unions, building societies and mutual banks have to pay more than the banks to the government to guarantee their deposits.

I was surprised that the figure was not higher.

Why should a customer of a building society or credit union have to pay more to guarantee their savings than a customer of a bank?

The survey results also back up another issue that mutuals have been highlighting.

Half the people surveyed were unaware of the big banks’ ownership of smaller competitors. More than 80per cent of people are unaware that the big four own certain home loan lenders. Commonwealth Bank owns Bankwest and 80per cent of Aussie, Westpac owns St George Bank, Bank of Melbourne and other financial brands.

For consumers, the ownership of these “sub brands” is further clouded when their advertising promotes them as an alternative to the big four – their owners.

Having the level of power and control that the banks have is something that, sensibly, most Australians don’t believe is a good thing for this country.

The government now has evidence before it that consumers (voters) also think the big four have too much influence, make too much profit and do not face enough competition.

What is the solution? The banking system needs balance. The best way to do that is to have an independent inquiry to look at the current rules and change them to create a more level playing field.

Not the big banks nor the mutual sector setting the agenda. An independent umpire acting on behalf of Australian mortgage holders, self-funded retirees as well as those of us just trying to pay the bills or save for a home or holiday.

People are tired of the big banks making massive profits and being so dominant.

It is time for the government to listen to the people and take action. Let’s change the rules and bring balance back into banking to favour consumers, not the banks.

It is time to make your voice heard. Follow the movement or have your say by visiting www.balance

banking.com.au.

Don Magin is chairman of ABACUS, the association of building societies, credit unions and mutual banks, and chief executive of Greater Building Society.